PMP CEO David Kirk has
jumped ship to Fairfax in a move that was warmly welcomed in the
company’s newspapers, but hasn’t exactly excited investors as shares in
the newspaper company fell 7c to $4.34 this morning in a rising market.
Given that PMP shares also fell 2c to $1.28, the reaction is ambivalent
at best and Kirk won’t make Crikey’s list of market movers.

Kirk
was the second publicly known external Fairfax candidate after Doug
Flynn, an Australian from London who used to work at News Ltd and
instead took the top job at Rentokil, cracked Crikey’s list of top 50 management exports and launched a huge spray at Fairfax along the way.

Given
that Fred Hilmer’s plans for departing were announced in May 2004, the
appointment of Kirk has taken too long but he probably didn’t become
available until at least serving two years at PMP.

Kirk probably wishes he’d taken the Fairfax job late last year before this piece
from a PMP insider appeared on Crikey in mid-February, pricking its
share price bubble and predicting the subsequent profit warning that
sent the shares down 35% in one day.

Kirk certainly helped
provide some much-needed shock therapy to PMP early on but his tenure
was hardly distinguished. It was marred by the profit downturn earlier
this year as the company under-estimated the cost of the changes in
printing procedures. PMP and Kirk also mishandled the Gordon and Gotch
magazine distribution subsidiary which had trouble with the so-called
First Fleet Joint Venture with Network Services (part of ACP). This is
what Kirk said in a statement revealing the profit downgrade in April:

“PMP
is undertaking a major restructuring of the capital base in the print
business. This has reduced capacity more than we previously expected.
We are simply not able to process the volume of work in the six month
period we have previously forecast.”

Then there’s the magazine
brouhaha with Gordon and Gotch, which lost $4.8 million in the year to
June, including $4.6 million in the second half. Crikey understands the
extraordinary losses were around $4-5 million on top of that in asset
write downs and cost write offs.

That said, Kirk isn’t a
neophyte when it comes to the paper industry. This was his background
in the announcement of his appointment to PMP in early 2003:

“He has extensive experience of the newsprint and
magazine paper markets, and is currently regional president of Norske
Skog (Australasia) Sydney, part of the Norwegian Norske Skog group, the
world’s second largest manufacturer of newsprint and the third largest
manufacturer of magazine paper. He is also Chairman of the Australian
Paper Industry Council.”

Good credentials
for a printer like PMP, but a newspaper company like Fairfax? Hopefully
he will show a greater understanding of the importance of papers than
Fred Hilmer did.

Keeping morale high amongst journalists will be
an important challenge for Kirk but Crikey hears his record at PMP
wasn’t too flash in this regard. A report commissioned by Kirk into
organisational and cultural efficiencies was delivered a week ago and
was scathing in its findings. Maybe Kirk was too nice to get serious
about chopping out the dead wood within PMP. It’s all very well
bringing in new machines, but maybe PMP needed to bring in more new
people.